Research Report Hasnain

8/9/2019 Research Report Hasnain

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Perceived Barriers in the Adoption & Usage of Credit Cards

Perceived Barriers in theAdoption & Usage ofCredit Cards

Researchers Roll #

Hasnain Akhtar 217M. Ayaz Amjad 225M. Fahad Butt 226Madiha Irshad 228Nain Tara 240

Department of Management Sciences 1


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Declaration

We declare that no part of this research paper has been taken from existingpublished or unpublished materials without due acknowledgement and attrition,and that all secondary material contained therein has been fully and

appropriately referenced to the best of our ability.

Signed _______________

Dated: 12th April 2010



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Acknowledgments

We would like to thank Almighty Allah, for blessing us intellect that has helped uscompleting this complex task.

We would like to thank our supervisor Mr. Abdul Mannan Khan for his guidance,encouragement, tremendous help and support throughout our research. Wewould like to thank the staff members of banks that include Habib Bank Limited,Bank Alfalah Limited and United Bank Limited for clarifying our understandingabout basic concepts in credit cards.

We would like to thank our parents for sponsoring us and other family members

& friends for their love and support.



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Abstract

Purpose: - The purpose of this research is to present an exploratory research into thecurrent users and non-users of credit cards. The aim is to identify the different factorsthat cause low adoption and usage rate among the Pakistani population. It then aims to

discuss barriers that are acting in the stumpy growth of a potential credit card market.

Design/Methodology: - A survey was conducted, statistical test were used to identifythe intensity of each of the factor, identified through previous literature. A sampleconsisting of both cardholders and non-cardholders was utilized to gauge the differencesamongst the perception about credit cards in both the segments. Than statisticalanalysis tool t-test was employed to determine the associations between the results ofcardholders and non-cardholders.

Findings: - The adoption & usage of credit cards was found to be significantlyinfluenced by demographic factors as well as perceptions that include credit card leadsto overspending, unreasonable interest rates, and lack of information, low

acceptability. Certain variables create bigger barricade for the users like additionalcharges, high interest rates, insufficient credit limits etc.

Research Limitations/Implications: - This research provides an in-depthunderstanding of factors or variables influencing the plastic money market negatively inPakistan. Thus it is useful in designing marketing strategies for card-issuers for bettergrowth of this payment mechanism. The sample was drawn from the narrower base thanthe actual target population of the Pakistan market.

Practical implications: - Hitherto there has been a very limited (almost zero) amount ofresearch into payment cards in Pakistan and yet with the market for financial servicesopening up in Pakistan, this research is timely both for domestic banks wishing to issue

credit cards and for foreign entrants, seeking to enter the Pakistani market via theirexpertise in credit cards.

Originality/Value: - Despite the importance of consumer credit, virtually no literature orresearch exists on identifying the barriers in the adoption & use of credit cards inPakistan. So this paper intends to close this gap. Further, by combining thedemographics, costs incurred with the respondents perceptions concerning credit cardownership and use, our study offers a richer analysis to explain consumer behavior thanprevious literatures.

Key words:credit card, barriers, Pakistan,

Paper Type:Research paper



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TABLE OF CONTENTS

TABLE OF CONTENTS .....................................................................................................5

............................................................................................................................................. 5



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Introduction

The liberalization of the monetary sectors in Asia has resulted in the rapid propagation ofcredit card companies and financial companies providing other types of consumer credit.In modern commerce, credit cards (along with debit cards) serve as a payment devicein lieu of cash or checks for millions of routine purchases as well as for manytransactions that would otherwise be inconvenient, or perhaps impossible.(1970-2000;Durkin, Thomas A). The credit card market in overall world has expanded drastically thatthe issuers of foreign countries has introduced mobile phone credit cards for theconvenience of their customers.(Amin, 2008) This, coupled with the entry of foreignbanks, has greatly increased the number of credit cards available, and hence suchspending in Pakistan. Although credit card was introduced in Pakistan decades agowhen Habib Bank, the largest bank in Pakistan, launched its gold card, but people hadhardly know about this card because of its very limited issuance. Several years back,Master card was introduced by Allied Bank of Pakistan which also didnt receive thatmuch appreciation. In 1994, Citibank had introduced its VISA Card and that was theturning point in the history of Plastic Money in Pakistan. Citibank had done a tremendous

job to edify people of Pakistan, as well as, financial industry about credit cards and its

significance in today's world. It was their aggressive marketing and heavy investment intechnology, that made deserving Citibank to be called the industry leader of Pakistan'scredit card business. After the success of Citibank card, Muslim Commercial Bank, Bankof America, and National Bank of Pakistan had launched their credit cards. In the verynear future we are expecting more local and international banks to enter and havesuccess on the horizon of Pakistan's credit card business. The plastic money industry inPakistan is one of the undeveloped ones. At this time, there are a few people which areusing them or even are aware of its services. The majority of people does not consider itfruitful and part their ways from it.

It may be pointed out that the misuse of debit/credit cards has opened new chapters offraud and forgery. In most of the cases, the misuse of cardholders personal information

has occupied a prominent place. Previously, Point of Sale (POS) terminals used togenerate transaction slips visibly indicating the cardholder personal information such asname of the cardholder, 16-digit Card Number, date of expiry, etc., which can easily beused for fraudulent purposes. The State Bank of Pakistan has taken several measuresto enhance security of plastic money transactions in the country with a view to effectivelyaddress customer complaints and to ensure continued growth in the fields of e-bankingand e-commerce. (State Bank of Pakistan, August 23, 2008)

According to status report of Q2 fiscal year 07-08, total 6.7 million plastic payment cardswere in circulation which showed 2.5% increase over the previous quarter. Total numberof credit cards in transmission has increased from 1.62 million to 1.66 million for thesame quarter, registering an increase of 2.5 % over the previous quarter. The major

portion of plastic payment cards is absorbed by debit cards which comprise of 4.8 millionusers all over Pakistan, as described in second quarter report of fiscal year 2007-08,issued by State Bank of Pakistan. (State Bank of Pakistan, 2008)

So overall we can say there is growth in this field, but still some particular forces areacting as barriers that impede people to use credit cards and for the better growth of thisindustry these barriers must be immediately identified and cured.



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This research report proceeds with explaining the problem statement, followed byfindings of the previous researchers written under literature review and theoreticalframework. Afterwards, model and methodology of the analysis will be explained.Methodology section includes sample selection, sampling techniques and analysistechniques employed to back the results of the findings. Further, findings section isestablished where the results of the research are elaborated. Lastly, some

recommendations and implications are presented along with the limitations faced by thepanel of researchers.

Problem statement

Few years back, it has been estimated that there are likely to be around half millionpotential card users, in the near future (http://www.instecdigital.com/1/plastic.htm).According to SBP report the tendency of number of cardholders is increasing. But themajor portions of people are attracted toward debit cards. Acceptance of credit cardsamong the general audience has been quite low in comparison to debit cards and ATMcards. Still major proportion of population is not having credit card or avoid to use it eventhey have sufficient resources and affordability of credit cards. There is a need to

explore the reasons of such problems in Pakistan as:

Why people are not attracted towards credit card.

Why cardholders are using there credit cards less frequently.

Whether there is discrepancy at card issuers end or there are some constraints

in customers perception.

Literature Review

Although there is substantial literature on credit card usage and adoption internationallybut in Pakistan research work on plastic money is limited and dont provide insight ofconsumer attitude. There is a need to explore the reason of consumer attitude aboutWhy they are not attracted toward plastic money, especially credit card?

A number of factors are identified based on evidence of previous literature. In this studythese factors are examined under the approach, as a barrier in use and adoption ofcredit cards. This study includes the factors, which influence the adoption & usage ofcredit card and are classified in the five main categories. These categories areDemographic, Awareness, Cost, Function and Socio Psycho Factors. These categoriescomprise of various variables, which play a significant role in the adoption & usage ofcredit card, in the context of Pakistan. The findings of main publications are summarized

below.



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Demographic

Income

The effect of demographic factor like income on the usage of credit cards was studied byvarious researchers in different settings. Two researchers, Mandel (1972), and Kinsey(1981), identified that income is a primary determinant of credit card usage and familieswith different income categories perceived pros and cons of credit cards differently.Similarly Worthington and Stewart (2007) concluded that high earners are moreattracted towards credit cards and mostly pay their bills on time. Likewise, Peterson(1977) also makes the case that there is positive relationship between credit card usageand income level which implies that high income people have high intensity of usingcredit cards. In addition the researcher identified in Hong Kong that income is only thedemographic factor influencing credit card usage between active and inactivecardholders Chan (1997). Again it is possible to see how Lu (2004) agrees with abovementioned researchers by identifying that higher the income level of cardholder the morehe is attracted to use credit cards. All above findings indicates that high income peopleare more frequently use credit cards but the average income level of Pakistanis iscomparatively low, which is one of the major problem that resist use and adoption ofcredit cards.

Age

Age is also one of the most important demographic factors and interpreting it for currentstudy may give a general result that as the age of the individual increases, its demandfor credit also increases and hence the usage of credit card may enlarge. Gan,Maysami, and Koh (2008) recognized that age is a strong determinant of credit spendingthat is young adults had higher credit outstanding compared to elderly people. Likewise

Chirapanda and Yoopetch (2008); Delener and Katzenstein (1994) make the case thatthe middle age people are more likely to use credit cards. Nevertheless, previous studiesby Shannon and Yoopetch (2002) suggested that older people tended to have morecredit cards. Pakistans culture is non-innovative, even the youngsters feel fretfulness toadopt new techniques, so the elders have lesser probably to adopt credit card services,instead of having enough resources.

Gender

Where gender is concerned, Gan, Maysami, and Koh (2008) found that femalespossesses more credit cards than males and also females of lower or middle incomegroup see them as status symbol. Various researchers found that females used their

credit cards more frequently and they gave the view that females tended to have ahigher average number of credit cards than males. Contradicting this, others suggestedthat single males were more likely to use credit cards than females (Kinsey (1981), andSlocum and Matthews (1970); White (1975), and Adcock et al. (1977); Kinsey (1981)and Arora (1987); Hayhoe et al. (1999); Armstrong and Craven (1993); Chan (1997)).On the other hand, Delener and Katzenstein (1994) found that females use more creditcards in Asian and Hispanic culture. In Pakistan, the proportion of working women is lessas compared to men so the scenario may be different over here.



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researchers identified that informational barriers impede the ability of credit cardcustomers to obtain a competitive interest rate through search. (Calem, Gordy, andMester 2005). In all above mentioned findings awareness is described in differentdimensions, which are important to be considered in Pakistans settings, where peopledo not exactly know credit card terms and conditions even the credit card users.

Cost

Cost is the complications and difficulties a person face in using and adoption of creditcards. It is as important as income level. A study conducted by White (1975) suggestedthat rational consumer accepts only those means of payment that reduce the cost ofmaking transactions. In Pakistans scenario, the consumer is not rational and cannotuse new methods or techniques properly in addition to that the services rendered byissuers of credit card are not enough, resulting this scheme of payment become morecomplicated and costly.

In this research cost is classified in two sub-categories, for the sake of convenience, to

manage all cost related factors.

1) Monetary Cost (like interest rate, annual fee, credit limit, type of transaction):the costin terms of money.

2) Non- Monetary Cost (like low acceptability, long application approval time, shortlypayment period, legal requirement complications and difficulties in paying bills)

1. Monetary

Interest Rate

The effect of interest rates on the adoption and usage of credit cards was identified byGan, Maysami, and Koh (2008) which concluded that interest rate is an important factorin the credit card usage which influences it negatively. Brito & Hartley (1995) has saidthat using credit cards involves borrowings, paying high interest rate but it is attractiveinstrument in case of lowest transaction cost. Lunt (1992) has said that adoption criteriaof credit card depend on high credit limit, quality customer services, fair fees and fairinterest rates. Chirapanda and Yoopetch (2008) put forward a study on the credit cardmarket of Canada. Two proposals are contrasted here. National Liberal Caucus reportsuggested, The government should consider an interest cap mechanism for all creditcard accounts for retailers and financial institutions.(p.146). the reason behind thisproposal was the interest rates on credit cards in Canada are very high, in spite of

competitive market environment. The other MacKay Commission reported that,providing new sources of competition to traditional suppliers through application of newtechnology and new ways of thinking about these products. (ibid, p.27) This commissiondidnt emphasize on higher interest rates but has given the importance to newtechnological advancements. It was concluded by Barry Scholnick that interest rateceilings are not necessary for market regulation. It will discourage the Consumer creditcard market. In Pakistan, interest rates charged are also on the higher side and peoplesee interest as non-Islamic activity, so it creates enough amount of barricade for peoplethat they avoid to use any kind of credit card. Also the interest rate structure is so much



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complex that a simple person gets confused whether it is reasonable or I am going downin a well.

Annual Fee

Annual fee is the amount charged by the issuer for holding the card for at least a year. Itis usually charged at the end of every year through deduction from the bank account ordirect payment. But the cardholder is duly informed about that. Chan (1997) found inHong Kong that active and inactive card holders demanded low annual fee and longinterest free payment periods. Chirapanda and Yoopetch (2008) indicated that bankmarketers should adopt low annual fee for domestic as well as world wide credit cards.Shannon and Yoopetch (2002) found that premium cards have more annual fee (almosttwice) as compared to regular credit cards. They found negative relationship betweenthe annual fee and card usage. Arthur and Dimitris (1994) investigates the economyvariables which have relative importance in credit card selection criteria. It includes

joining or annual fees by which credit cards are perceived as expensive. Most of creditcard issuing companies charge a high joining or annual fees, but do not mention inpromotional activities. In Pakistan, although the complete information is provided but, asthe plastic money industry is not that flourished, they charge higher fees which canhinder people from using credit cards and make them say that credit cards areexpensive.

Credit Limit

Gan, Maysami, and Koh (2008) quoted that generous credit limit is one of the importantvariables that count at the point of sale. They also cited that an increase in credit limitalso generates a significant rise in debt. Chan (1997) in Hong Kong found that inactivecard holders were not feeling comfortable with their credit limits. Chirapanda andYoopetch (2008) found in Thailand that majority of respondents give importance to high

credit limits. As far as Pakistan market is concerned, they are offering reasonable creditlimits but the needs of people are on the higher side so they demand superior creditlimits than what the issuers are offering.

Type & Size of Transaction

White (1975) found that small size and large size of transactions enhance the cost ofmaking payments that discourage use of credit card.

2. Non-monetary

White (1975) indicated that fixed cost must paid by the card holders it may include timecost, energy cost and psychic cost.

Low Acceptability

Chirapanda and Yoopetch (2008) suggested that issuers of credit card are required tocontact with different business that accepts there credit cards for the purpose ofincreasing number of collection points. Chan (1997) found in Hong Kong that creditcards of inactive users are not widely accepted because of their unlimited usage rate.



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Acceptance of credit cards should be facilitated by merchants at their outlets. Yiing JiaLoke (2007) investigated the determinants which influence their participation in creditcard payment schemes. He classifies the determinants in three categories, merchantsbackground, business characteristics, effects of other players decision on merchantsperception. Merchants background includes his age (indicate negative relation withmerchant acceptance), number of personal credit cards held (positive relation), and

computer user (to check the likelihood of adopting new technology). In second categorythe business sector and value of transaction influences on merchant decision. Theusage of card by customers for bill payment and acceptance of credit cards bycompetitors have strong impact on merchant participation in credit card paymentschemes. Chirapanda and Yoopetch (2008) found 72.3% of respondents giveimportance to acceptability of their card at international level.

Long Application Approval Time

Chan (1997) found in Hong Kong that some of the issuers were using short applicationapproval time to encourage adoption of credit cards.

Short Repayment Period

Chan (1997) also found that active and inactive card holders demanded long interestfree period. Chirapanda and Yoopetch (2008) suggested longer payback period to bankmarketers to meet competition

Functions

Ancillary or Non-price benefits

Chan (1997) suggested provision of ancillary functions that can enhance the usage rate.Ancillary Function means other benefits like ATM services or Debit Card services thatmay be offered additionally.

Service Quality

Chan (1997) suggested that card issuing company should affectively manage andhandle complaints of their card holders.

Security

Arthur and Dimitris (1994) found that security is an important attribute in the selectioncriteria of credit cards. Security is in two senses, as protection against credit cards fraudor in the case of card lost/stolen. Bills and balances should be accurate. And these cardsshould be insured by credit card companies.



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Socio-Psycho

Type of Users

Devlin, Worthington, and Gerrard (2007) found that credit cardholders are of two types,first one is convenience users and second type is installment users. WhereasWorthington, Stewart, and Lu (2007) divided the type of users into two groups, that wasof transactor and revolver. They also concluded that transactor users find it easier to paythrough credit card rather than cash. Another set of researchers identified that people inthe low socio-economic classes use their cards for financing purposes and peoplebelonging to high socio-economic classes use it for convenience. (Gan, Maysami, andKoh 2008)

Life Style Patterns

Mathew and Slocum (1969) exposed relationships between social class and income and

usage of credit cards. According to this research the purpose of credit card usage isconvenience for upper social class and installment for lower social class. Joseph T.Plummer (1971) carried out study on the life style patterns and usage of bank creditcards. On the basis of demographic and card usage data, the higher income, bettereducated, middle aged, professional segment is more important for potential segment ofmarket. A set of life style patterns like contemporary and risk-oriented are more likely touse credit cards for payment purpose. Whether the traditional and conservative (forinstance, financial transactions should be made in cash) approach towards ones lifestyle may be an important barrier in the credit card usage. Arthur Meidan & DimitrisDavos (1994) identified that cards image is important for status conscious users, as itassigns them prestige.

Card Design

Devlin, Worthington, and Gerrard (2007) studied the reasons that why certaincardholders always have a main card and concluded that about 7 % of the users areattracted by card's design and appearance. They use one of their cards more frequentlybecause it is pleasing to the eye.

User's Intentions

User intention (USINTs) is very important in determining the perceived barriers inadoption & usage of credit cards. According to Amin H., (2008) there are five elements;through which we can measure the users intentions. These are Perceived Usefulness(PU), Perceived Ease of Use (PEOU), Perceived Creditability (PC), The Amount ofInformation about Credit Cards (AMIC) and Perceived Expressiveness (PE). This is alsosupported by the (Guriting & Ndubisi, 2006; Kleijnen, Wetzels, & de Ruyter, 2004;Pikkarainen, Pikkarainen, Karjaluoto, & Pahnila, 2004; Venkatesh & Morris, 2000).

PU is defined by (Davis, 1989) as degree to which a person believes that using aparticular system would enhance his/her job performance. It has a positive relationshipwith the USINTs (Cheong & Park, 2005; Chiu, Lin, & Tang, 2005).



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PEOU is a degree to which people believes that anything that is used will be free ofeffort (Davis, 1989). It has a positive effect on USINTs (Guriting & Ndubisi, 2006; Davis,1989; Kleijnen, Wetzels, & de Ruyter, 2004; Wang, Wang, Lin, & Tang, 2003).

PC is perceived security; it means that how much a card is secure (Wang, Wang, Lin, &

Tang, 2003). It has positive relationship with USINTs (Wang, Wang, Lin, & Tang, 2003;Luarn & Lin, 2005).

AIMC has positive relationship with USINTs (Sathye, 1999; Howard & Moore, 1982).AIMC is the information about the credit crad (Amin H. , 2008).

PE is defined as ones ability to express his/her thoughts (Cassidy, Park, Butovsky, &Braungart, 1992). It has positive relationship with USINTs (Amin, Muhammad, Hamid, &Lada, 2006; Nysveen, Pedresen, & Thorbjornsen, 2005; Plant, 2001).



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MODEL


AwarenessInformation Level,Information Source

CostMonetary and Non-

monetary

FunctionsType of Users, Life StylePatterns, Card Design,Users Intentions, Trust,

Culture

Socio-PsychoAncillary Functions,

Service Quality, Security

Adoption &Usage ofCredit Cards

DemographicAge, Income, Gender,

Marital Status, Education& Occupation


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Hypothesis

Awareness: - H0: Awareness has positive relationship with adoption&usage of credit cards.

Monetary Cost: - H0: The greater the monetary cost, lower the usage &adoption of credit cards.

Non-Monetary Cost: - H0: If the non-monetary cost is increasing than the usage &adoption of credit cards is decreasing.

Objectives and Significance

The aim of this study was twofold; first one was the identification of perceived barriersthat cause low usage among cardholders and to explore factors which resist people toadopt credit card as a mean of payment. The second purpose was not to limit itself toidentifying those perceived barriers but also to explain the relative significance of eachattribute that has influence on customers attitude. This study will be helpful for cardissuing companies to adopt such strategies that will reduce the impact of perceivedbarriers, for the purpose of meeting nationwide as well as worldwide competition. Thecard issuer may get momentous information from the findings of this research that will beaccommodating in designing their marketing strategies, which will position their producthigh in customers mind.

Research Design and Methods

In lights of previous studies conducted by researchers like Worthington & Stewart

(2007), Chan (1997), Gan, Maysami, & Koh (2008), Chirapanda & Yoopetch (2008),Slocum & Matthews (1970), Kinsey (1981) etc. and in-depth interviews with bankmanagers, a set of five factor was identified which were sub divided into 26 attributes.Classification of these factors is given below:

Factor # 1 Demographic:

Age

Gender

Income

Marital status

Education



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Occupation



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Factor # 2 Awareness

Information

Factor # 3 Cost

o

Monetary Costo

Non-monetary Cost

1

) Annual fee

1

) Acceptability

2

) Interest rate

2

) Application approval time

3

) Credit limit

3

) Repayment period

4

) Legal requirements complications

5

) Difficulty in paying bills

Factor # 4 Function

Ancillary function

Service quality

Security

Factor # 5 Socio-Psycho

Types of users

Perception



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Lifestyle patterns

Card design

Appearance

Trust

Users intentions

Culture

In Hong Kong, a study Customers risk perceptions of electronic payment systemsconducted by Simon S. M. & Victor T. F. Ng (1994). They viewed cash and credit cardsas traditional forms of payment as compared to electronic payment system. But, incontext of Pakistan, transactions through credit cards are considered as modern meanof payment, by which it can be assumed that credit card market in Pakistan is at its initialdeveloping stage and has low competition level as compared to other countries. Thefunctional and socio-psycho factors mentioned above can be properly analyzed whereintense competition exists in the market, which is obviously not in the case of Pakistan.Demographic, awareness, cost and security factors were examined through thiscomprehensive approach. The reasons for not focusing on the other two factors weretime constraints and difficulties in data collection.

Population and Study Sample

In this research our target population was both cardholders and non cardholders and wehad collected data from both. Comprehensive approach was used in this study wheretwo forms of barriers were variable of interest. First was perceived usage barriers amongcardholders, and the second was perceived adoption barriers among non cardholders.

Sample Size and Selection of Sample

As our target population was mainly Bahawalpur, on the basis of which results will begeneralized so sample size selected was around 159 people belonging to different cities

(like Multan, Lahore, Islamabad and Bahawalpur) having or not having credit cards.(Bartlett II, Kotrlik & Higgins 2001).

Collection of Data

For the collection of data, questionnaire data collection technique was used and thesample size or number of respondents, belonging to target population, was 159. Theserespondents were approached by five trained interviewers which facilitated the



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respondents to provide right kind of information. These respondents were selectedthrough convenience sampling approach from all over the city and, to some extent, fromother cities of Punjab like Multan, Faisalabad and Lahore etc. We had defined ourpopulation as persons having at least one credit card and non-cardholder individualshaving sufficient resources.

Analysis

As this research was of comprehensive and comparative nature, means and standarddeviations of the two segments were analyzed. For further deep findings and validationof the study results, parametric technique of t-test was used. In t-test, level ofsignificance was compared with the p-value calculated through the test and simplehypothesis and decision rule was employed. The hypothesis for t-test were

H0 = No difference among the means of two segments.

H1 = There is some significant difference between the two.

If the p-value of the data was found to be less than the significance level (5 percent), thenull hypothesis will be rejected.



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Findings & Discussion

The data of 159 respondents consisting of both cardholders and non-cardholders werecollected from different cities of Pakistan for the purpose of this particular study.

Customer Characteristics Frequency Percent

Age Below 25 51 32%

25-35 59 37%

35-45 22 14%

45 and above 27 17%

Gender Female 64 40.3%

Male 95 59.7%

Marital Status Single 74 47%

Married 85 53%Religion Islam 159 100%

Occupation Govt. employee 45 28%

Business 28 18%

Student 36 23%

Landlord 24 15%

Others 26 16%

Education Level Matriculation 6 4%

Intermediate 10 6%

Bachelors 62 39%

Masters 78 49%

Other 3 2%

Income Level Below 20,000 56 35%

20,000-30,000 32 20%

30,000-40,000 36 23%

40,000-80,000 31 19%

80,000 and above 4 3%

The study examined over 150 banking customers in Pakistan in terms of theirdemographic background, including gender, age, income and education. Of the 159

respondents, 95 respondents (59.7% percent) were male and 40.3% were females. Thelargest respondent group (37%) was from the age group of 25-35. Most of them weremarried (53.5%) while the single respondents were also of equal magnitude (46.5%).Out of 159 respondents, 28.3% were government employees. The mostly respondedgroup belonged to the low income group i.e. Below Rs.20, 000 (35.2 percent). Themajority of the respondents held Masters degree (almost 50%). The people had moretendencies to have the personal account than business and around 89.3 percent had thepersonal account.



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As demographic factors are taken as independent variables, their impact can be felt onthe dependent variable. Demographics have dual nature; they can be taken asindependent or moderate variables. But for this study, we had considered it asindependent variable, in order to find their association with previous findings.

Gan, Maysami and Koh (2008) proposed that females tend to use more credit cards, but

our research found completely opposite results, as the most of the cardholderrespondents were males.

Income is a big barrier in adoption of credit cards. Most of the respondents were from alower income group and they simply dont have enough resources to have such plasticpayment card. Worthngton, Stewart, and Lu (2007) identified the similar orcomplimentary results which showcased results almost similar to our research.

The above paragraph described demographic characteristics of the sample. Now thetested results of variable categories will be elaborated. In this paper t-test is used intesting the null hypothesis for equality of means of cardholders and non-cardholders.The t-test will indicate whether the means of the subject under study were significantly

different, that is, the observed difference between the sample value and thehypothesized value is true and cannot be due to mere chance.

Tables provide the descriptive statistics and the t-test of the both segments i.e.cardholders and non-cardholders. To determine whether the differences in means weresignificant, the p-value must be less than the 0.05 or 5 percent level. The decision rule isif the p-value is less than 0.05 the null hypothesis i.e. (no difference among the groupsmeans) will be rejected.

TABLE 1

Awareness

CardholderNon-

cardholder P-valueMean S.D Mean S.D

Level of Information 3.15 0.82 2.30 0.77

Information Sources:

Friends and Family 1.96 0.76 1.76 0.7 0.090

TV programs 1.83 0.70 1.49 0.55 0.001

Internet 1.85 0.80 1.56 0.75 0.018

Bank Staff 1.99 0.76 1.71 0.77 0.027

Company Advertisements 1.85 0.67 1.68 0.64 0.096

Brochures 1.76 0.75 1.45 0.61 0.006

The first section of the research sought to identify the awareness level of people ofPakistan about credit cards. For this purpose two questions were asked from therespondents, purpose of which was to identify the level of awareness and source fromwhich both the segments of the research i.e. cardholders and non-cardholders receiveinformation about credit cards. The results showcased in the table 1 purports thatmajority of the respondents do know about credit cards but not enough detail. More than



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half percent respondents asserted that they dont possess complete information aboutcredit cards but they are also not ignorant about this payment mechanism. In order tocreate awareness among the general audiences, issuing companies must provideinformation to people through different mediums.

Now the medium of information is also of utmost importance. Some people receive

valuable information about things through advertisement or friends & family or all theway through most advanced method, internet. The research survey found that for non-cardholders, most helpful source for receiving the information about credit cards isFriends & Family. This purports that; they receive information from their relatives orcolleagues that are already using such payment procedures. So, companies that arekeen to increase the awareness level of consumers should focus advertisement throughvarious available channels like television programs, brochures company advertisementsand bank staff cooperation.

When we talk about cardholders their main source of information is bank staff. Theystate that the employees of their bank provided information regarding credit cards andpersuaded them to adopt it. Now if any new offer is launched or any charges are

imposed they are duly informed by their bank managers. As far as level of awareness isconcerned, it is quite obvious to observe that almost all of the respondents would haveexperience of using credit cards.

When we compare the results of cardholders with the results of non-cardholders, it isevident that the main source of information is different for both. On one side cardholdersreceive extensive information from bank staff, while non-cardholders have a little bitknowledge from the colleagues and family members. This difference is statisticallyproved by the use of t-test, where t-value depicts that brochures or leaflet is thatinformation resource which has the statistically different mean for both groups. Othervariables are close to each other and mean difference between the two segments maybe due to sampling error.

TABLE 2

Perception

CardholderNon-

cardholder P-valueMean S.D Mean S.D

Overspending 3.64 1.05 3.30 1.22 0.059

Overspending Fault 3.76 1.01 3.89 1.13 0.438

Interest on Loan 3.36 1.07 3.17 1.48 0.344

Islamic Values 3.43 1.08 3.20 1.51 0.280Debt 3.32 1.02 3.48 1.16 0.369

Security Risk 3.15 1.09 3.42 1.14 0.130

Adopting new technology 3.56 0.90 3.64 1.21 0.623

Consumers without credit cards 3.08 1.16 2.89 1.11 0.300

Online Payments 3.89 1.09 4.26 0.81 0.016

Payment on outlets 3.64 0.92 3.77 1.11 0.414



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Table 2 presents some of the perceptions or perceptual problems of Pakistan people,regarding credit cards.

The results generated by applying SPSS techniques reveal the mean value of 3.30 withstandard deviation of 1.220, which implies that a large proportion of audience agree or

somewhat agree that credit card usage may lead to overspending. The research surveyfound that there is a general perception among the people that credit card ownershipgenerally motivates people to spend out of their pockets. When we compare this resultwith the cardholder one, it is evident that its intensity is quite strong there with the meanvalue of 3.64 and relatively less variance. In addition, both users and non-users of creditcards agree that this overspending is the fault of consumers and not the issuers. So it isconsumers responsibility to manage and control its spending and it does not create assuch barrier in adopting or impeding the use of credit cards. However, statistical tool t-test reveals contrary results. The p-value for the data is greater than the significancelevel 0.05 which means null hypothesis (no difference among the means) is accepted.Any difference occurring may be due to chance.

Our results comply with the findings of previous researchers like (Worthington, Stewart,& Lu, 2007) where they identified the general perception of the people of China whichwas same as of Pakistanis. They concluded the revolving credit card users tend to shopmore than their budget as they are more aware about the risks and cost ofoverspending.

Previous researches conducted in different Islamic states like Saudi Arabia, Turkey andUzbekistan have found that people often feel credit cards as against Islamic lawsbecause of the inclusion of interest (which is purely against Islamic values, denoted asRiba). Our research, conducted in Pakistan, has found analogous type of results. Themean calculated for non-users implies that people of Pakistan generally perceive it asagainst Islamic values. But a serious fact to be noted here is that the variance in the

results is on the higher side i.e. 1.511. This explains that people are not sure about itwhich is mainly due to lack of information. This wrong perception is generated becauseof less information regarding its working. So, companies must generate awarenessamong the people and educate them how it is free from interest. On the other handusers of credit cards also feel that it is against Islamic values, so they are trying to avertits usage. The issuers must address this issue as this is turning out to be the biggerbarricade in the development of plastic payment system in this country of southern Asia.However p-value results provide differing results. It states that, there is no statisticallysignificant difference between the two means as p-value is greater than the significancelevel.

A research question was quoted to know the peoples perception of debt creation as a

result of using credit cards. The research survey found that non-cardholders perceivethat issuers of credit cards make it hard for people to pay off their debt by imposingadditional interest expenses and charges. This perception acts as a barrier in theadoption of credit cards among the people of Pakistan. But, the other segment thatconsists of users of credit cards not intensely agrees with it. The results generated showsomewhat agreement by the users, so we can conclude that Pakistani users of creditcards dont think debt burden as a barrier in their less frequent use of credit cards. Theymostly use it for installment purpose i.e. to clear off their bills and pay later. So, theythemselves dig into debt and know several ways to get out of it. Previous researchers



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including Devlin, Worthington, and Gerrard (2007) found that credit cardholders are oftwo types, first one is convenience users and second type is installment users. WhereasWorthington, Stewart, and Lu (2007) divided the type of users into two groups, that wasof transactor and revolver. They have proposed the concept to distinct type of users andthis vary concept can also be applied in Pakistan where both type of users exists. To findout is this difference in the means of cardholders and non-cardholders statistically

significant, t-test was executed. The results found that there is no significant changebetween the two means and any difference occurring is due to sampling error.

Security of the payment mechanism is one of the key concerns for the people ofPakistan. When, a research question relating to judging the perception of users and non-users about the security of credit card or loss of money in case card is lost or stolen, theresponses were obvious. Majority of the people perceive that credit card is most likely tobe lost or stolen. The people which are not using it perceives this security issue as aobstruction in their adoption process while its intensity is quite weak in terms ofresponses generated by the current users of credit cards. They claimed that there is noissue of losing money in case credit card is lost or stolen, so they are not avoiding usingit just because of the security issue, there must be some other reasons. Security doesnt

affect the users may be because they are more aware about its features andunderstands the importance of pin code without which nobody can utilize the card even ifthe owner forgets the pin code, he may not able to use also. However statisticalsignificance analysis revealed that there is no considerable difference among the meansand any disparity occurring is due to chance or sampling error. Worthington, Stewart, &Lu, (2007) addressed same security issue in relativly different population setting ofChina found contrary results where respondents highlighted certain security issueswhich are to be resolved in an attempt to increase adoption of plastic paymentmechanism.

People of pakistan are considered to be backward and those kind of inhabitants who donot want to acclimatize to changes. So we considered this issue to find out whether this

change resistant nature leads people for not adopting or using the newly developedstate of the art payment contrivance i.e. credit cards. A research question was quoted toknow whether the people of pakistan are change defiant or not. The survey foundsurprising results which declares that people are open to any kind of change or happy toadopt newly developed products which may endow with benefits. This has resulted ininfringement of erroneous perception about Pakistani people. Although this mean valueis generated through a sample profile but because of the vary nature of research thiscan be generalized to whole population. The mean value of 3.64 for non-users has clearmeaning that people welcome new technological products if they are provided withcertain beneficial features for the users. The intensity of agreement is almost same forcardholder as for non-cardholders, which can be interpreted as advancement in thecredit card features is not the cause of their impeded use of it. Conversely t-test results

provide different results. It states that there is no significant difference between themeans of cardholders and non-cardholders and any discrepancy occurring is due tochance or sampling error.



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TABLE 3Cost

CardholderNon-

cardholder P-value

Mean S.D Mean S.DInterest rates 3.13 0.98 3.10 1.17 0.825

Credit card limits 3.48 0.83 3.18 0.88 0.028

Information about charges 2.79 1.31 3.06 1.10 0.155

No. of outlets in Pakistan 3.32 1.02 2.89 1.09 0.012

Acceptability abroad 3.44 1.07 2.80 1.16 0.000

Repayment period 3.41 0.95 3.26 1.04 0.341

Clearing Full Balance 2.97 1.31 - - -

Large Size Transaction 3.53 0.79 - - -

Paying Centre in Hometown 3.20 1.07 - - -

Security Features 3.15 0.94 - - -Application Approval Time - - 3.13 1.17 -

Up till now, we were addressing some perception errors by the general public withrespect to using or not using credit cards. But there are certain monetary and non-monetary costs are also present which are to be borne by the person in using oradopting a new thing. If these costs match the benefits it provides than people movetoward it otherwise rejects it. As mentioned in Table3, the first of the monetary costs isinterest rates. When the respondents were asked to tell whether the interest ratescharged on credit cards comply with the benefits it provides the responses wereambiguous. The respondents, who havent applied for credit cards were indifferent inreplying to it as they had no information regarding interest rates being charged today.

But the respondents who had applied for it but didnt proceed disagreed with thestatement. They claimed current interest rates are very high and benefits that can beaccrued from the use of it are not equivalent. So, this acts as a barrier in their adoptionof credit cards. On the other side, cardholders, either revolvers or convenient usersresponses resulted in almost equal mean but relatively less variance. It means thecurrent users are also limiting their use because of inequality among the interest ratecharged and benefits received. Similar results found when t-test was used to identify themean difference. It resulted in same less significant divergence among the two meanswhich is ignorable. There are numerous studies identifying the impact of interest rates onthe adoption and using of either credit or debit cards. Some valuable researches wereconducted by (Gan, Maysami, & Koh, 2008), Brito & Hartley (1995), Chirapanda andYoopetch (2008) and Lunt (1992) identified same results but in different settings. They

found that increasing rate of interest affects the adoption of credit cards negatively incountries like China, Thailand, Greece and Egypt which comply with our resultsgenerated through a research conducted in Pakistan.

In order to find whether the people are satisfied with the current credit limits offered byissuers, a research question was quoted to find its significance among the population.The survey found that cardholders are generally satisfied with the current prevailinglimits, but non-cardholders perceive it as a barrier as they consider it low. This differencein the mean values is statistically proven fact as p-value of data is below than the



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prescribed level of 0.05 which ultimately shows that the means of the two groups issignificantly different. So we can conclude that this credit limit enhancement can act as amotivator for the non-users and it has no or less significance for cardholders. Similarresults were found by various researchers like Chirapanda and Yoopetch (2008), Chan(1997) andGan, Maysami, and Koh (2008).

The acceptability is one of the key issues in determining the increased rate of adoptionand usage of credit cards. It may act as a barrier depending on the geographical locationof the concerned person. If we talk from the point of view of Pakistan, people living inKarachi, Lahore or Islamabad may have greater opportunities for using credit cards asthey have more outlets. But people of smaller cities like Bahawalpur, Hyderabad etchave less of those. Our research finds that non users generally agrees that there areless outlets accepting credit cards both domestically and internationally and this lowacceptability results in perceived barrier in their adoption of credit cards. The othersegment of respondents that consists of cardholders sees the outlets as satisfactory.This change may be due to change in geographical surroundings, as data is collected onconvenience basis and a larger proportion of cardholders is from the bigger cities of

Pakistan, that have more opportunities for using it especially at petrol pumps and retailstores. For further authentication of the results, t-test for two sample means was runwhich resulted in the rejection of null hypothesis. This means the differences betweenthe mean value of two data sets is significantly different. Our study comply with theresults found by previous researchers like Chirapanda and Yoopetch (2008), Chan(1997), Yiing Jia Loke (2007), Chirapanda and Yoopetch (2008) which also concludedthat lack of acceptability abroad may result in less usage and adoption rate.

In order to find whether shorten repayment period acts as an obstruction in adoption andusage of credit cards, the results depicted that both users and non-users perceive it asbarrier. But the percentage of barricade is stronger in existing cardholders. Chan alsosimplified this sort of result and explains it as the more the interest free repayment

period, the more the rate of adoption and usage of credit cards in countries like HongKong and China. As the table suggests, there is no such difference found in the meansof the two segments as p-value is greater than the alpha.

Normally application approval time is 6 to 8 weeks for allowing the applicant to properlyuse credit card. Although this period is not very much high but a passable proportion ofrespondents considers it as long enough that eventually stops them from obtaining thecredit cards. This result is supported by findings of previous researchers that includeChan (1997) and Brito & Hartley (2001).

As the focus of the research is also on the current users and finding the problems theyare facing which eventually turns out to be barrier in their usage or encumbers them to

evade using credit cards. A set of three questions was asked by the existing users toknow the obstruction factor. The first one is to check whether the users had missed theirpayment of outstanding balances which caused their less frequent use of this paymentmechanism. The result compiled through it concludes that majority of the respondentsadmitted that they had cleared their balance in full always and they pay it completely notpartially. The second question was to measure difference, if any, in the sizes oftransactions. Normally it has been seen (as described by previous researchers like AminH., 2008Devlin, Worthington, and Gerrard (2007)) that merchants feel hesitate to acceptpayment through credit card when payment is above than the certain level (100RMB in



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China). But the situation in Pakistan is different. A larger number of respondents haveadmitted that their merchant accepts payment through credit card irrespective of the sizeof transaction. The third question was related with the security concerns of the users.The responses to the question reveal an awareness of some of the security issues whichstill bedevil the credit card product. The responses were ambiguous which can beinterpreted as the cardholders are not so much satisfies with the security features

provided by the issuers. According to them the issuers must include some superfluoussecurity features that might help them to overcome their perceived security concern andhence increase their usage. On the basis of research findings we can conclude thatsecurity is one of those factors which are affecting the cardholders massively andcausing the circumstances which result in low usage among the Pakistani community.

The third section of the findings portion deals with explaining the variables or factorsthose are important for both users and non-users in their decision of adopting or using acredit card. This research found their intensity i.e. how important each of the variables isfor the person thinking to adopt or use plastic payment system and absence of whichmay eventually act as a barrier in the process. These 12 variables and their means for

both cardholders and non-cardholders is given below and for the sake of simpleunderstanding these are categorized in descending order where we can easily identifythe variable or factor that has more importance in the eyes of users and non-users. Wewill first explain the variable for non-cardholders and than for cardholders.



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Limitations

This section deals with the problems faced by researchers during data collection and

sampling procedures. As this research was conducted in Pakistan and was of pecuniarynature, there were certain problems faced by researchers which are listed below.

The first and foremost limitation of the study was time constraint. As theresearchers were the students and had diminutive time to conduct such anexploratory and meticulous research within the time line. So there is a chancethat some of the factors may be ignored or provided with lesser amount ofdetails.

Due to exploratory nature of study in context of Pakistan, the researchers focuswas on convenience based sampling that was less expensive and much quickerway to collect information regarding variables of interest. This may create some

of the sampling errors that may affect generalizability of the research.

The responses generated by non-cardholders may seem as non-realistic, whichis due to their less information about certain variables included in the research.

The majority of the females that have sufficient resources in Pakistan arehousewives and do not have tendency to adopt or use new types of paymentmechanism like online payment system, internet banking or credit cards. Thismay be the reason that a major proportion of data was collected through malesas females have less proportion of account holders and credit card ownership.(courtesy Bank Alfalah Limited)

Recommendations

As, the focus of research was, to identify the barriers prominent, in Pakistan capitalmarket, causing low usage and adoption rate of credit cards. Although these variablesare impossible to remove but their impact can be reduced as most of the variables arewrongly perceived by the general public. In this context, panel of researchers providessome recommendations for both issuing companies and consumers, which, ifconsidered, may encourage the climbing usage and adoption rate.

Issuers are required to offer discounts, gifts or bonuses if the cardholderspay their outstanding balance within time limit. This will create psychologicalimpression in the minds of consumers and will motivate them to pay their billson time.

It was found in the study that information level of respondents regardingcredit cards and its features is quite low. The issuer companies must ensurethe proper flow of information to both cardholders and non-cardholders. Theprovision of information should be through advertisement using differentpromotional channels that are close to the potential consumers.



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It was found in the results that information attached with credit cards is ofcomplex nature even cardholders doesnt exactly know about credit cardterms and payoff times. To reduce its complexity, issuing companies mustprovide detailed leaflets/brochures. They should appoint authorized officers

that will provide guidance regarding features of the credit cards. Currently,Habib Bank Limited is following this strategy and appointed new staffmembers just to handle applications of credit and debit cards.

Cardholders are to think rationally and should pay outstanding balance withinpredetermined time period to avoid interest that is against Islamic values.

It is found in the results of the research that most of the Pakistani peopleavoid using credit cards as they consider it against Islam because of inclusionof interest. To avert this perception, companies should introduce the conceptof Islamic credit card provided by author (Bakshi, 2006) currently eminent inUK. The other option could be to charge penalty instead of interest if somecardholders become habitual of not paying balances on time.

Longer and flexible payback period of making finance payment withinstallment plans encourages the adoption and use of credit cards.

One of the major problems is the unavailability of paying centers and Posmachines in different outlets in Pakistan. To remove this issuers are requiredto contract with other businesses like petrol pumps, domestic stores andfinancial institutions that will provide credit card services to customers inbroader way.

For increased acceptability among the people of Pakistan, banks and otherissuing companies must reduce their annual fees and additional charges.

Other ancillary functions should be added with credit cards like debit featuresATM facility. This will broaden the market as one card can be used for morethan one purpose.

Implications & Future Research

This research will be helpful for issuers to adopt different strategies that encourage use

of credit cards by understanding consumer behavior/perception.

Future researchers can focus on the last two classifications of the variables (Functionsand Socio-Psycho) which are ignored in this study because of time constraint.

Future researchers, who want to do further work in this field, may do in-depth study ofeach of the variable identified to see its impact on behaviors of the people. The futurestudy could be of longitudinal nature where data could be collected twice, first, in the



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presence of barriers and second after removing those barriers and studying the changeis it significant or not.

In Pakistan culture, it is considered that old age people are reluctant to adopt newtechnologies or payment mechanism. In future, a study can be directed just to identifythe perception of old age individuals regarding modern payment mechanism.



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Conclusion

Present study has compared credit card holders and non-cardholder in Pakistan, usingsurvey method. This analysis is attempted to identify almost all the factors influencingthe adoption and usage of credit cards. In this study, the demographic profiles andusage patterns of credit cards are reinforcing the previous findings by Mathew andSlocum (1969), Delener and Katzenstein (1994) Worthington and Stewart (2007). Fromthe viewpoint of potential market segments, the higher income, better educated, middleaged and professional segments are more likely to be attracted toward credit card. Boththe groups (cardholders & non-cardholders) placed a heavy emphasis on monetary costincluding high interest rates, heavy additional charges, and insufficient credit limit,imposed by issuers. Non-monetary cost is also a major barrier but its influence onconsumers perception is rather lesser than monetary cost. Usage and adoption isgreatly affected by informational barrier, security risk, strict legal requirement and lowdomestic acceptance.

In summary, credit card marketing campaigns should particularly consider flexibleinterest rates, relatively less annual fees, more places accepting credit card, simplisticinformation and minimal sanctuary risk. All the above suggestions should match thedemand and expectation of target market.



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ANNEXURES



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Questionnaire For Cardholders

IntroductionWe are the students of Department of Management Sciences of The IslamiaUniversity of Bahawalpur. We are conducting a research to identify the perceived

barriers for adoption & usage of credit cards. This will let issuers know about yourconcerns regarding credit cards. This questionnaire is also a part of thisresearch. We would like to have your cooperation in answering the followingquestions. All collected information will be treated with strict confidentiality andwill be used for study purposes only.

Agea) Below 25 b) 25-35 c) 35-45 d) 45 and above

Gendero Male

o Female

Marital Statuso Single

o Married

Religion -----------------------

Occupationa) Govt. employee b) Businessman c) Student d) Landlord e)

Other -----------Educationo Matriculation

o Intermediate

o Bachelors

o Masters

o Others ----------------------

Monthly Incomeo Below 20,000

o 20,000-30,000

o 30,000-40,000

o 40,000-80.000



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o 80,000 and above



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1. Your account type Personal Business

2. What do you know about credit card?

o I dont know what is a credit card

o I know about credit card but not enough detail

o I have enough information about credit cards

o I have experience of having a credit card

3. To what extent, each of the following sources was helping, to let you

know about the credit cards.

Not at all To some extent Great extent

o Friends & Family 1 2 3

o News articles and Television programs 1 2 3

o Internet 1 2 3

o Bank staff 1 2 3

o Company/Bank advertisements 1 2 3

o Brochures/ Leaflets 1 2 3

4. What kind of goods you purchase through credit cards.

a. Routine purchases

b. Luxury purchases

Please express your degree of agreement with following statements.(1 = Strongly disagree, 2 = Disagree, 3 = Indifferent, 4 = Agree, 5 = Stronglyagree)

Stronglydisagree

Disagree Indifferent AgreeStrongly

agree

5. Use of credit card may lead to

overspending.

1 2 3 4 5

6. Overspending is the fault ofconsumers, not the credit cardcompanies.

1 2 3 4 5

7. It is the banks right to chargeinterest on the loan they provideto customers.

1 2 3 4 5

8. Use of credit card is against 1 2 3 4 5



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Islamic values.9. Credit card companies make it

hard for people to get out of debt.1 2 3 4 5

10. Credit card is very likely to be lostor stolen.

1 2 3 4 5

11. I feel comfortable to adopt newtechnological products. 1 2 3 4 5

12. Consumers would be better off ifthere were no credit cards.

1 2 3 4 5

13. Credit cards are very helpful foronline payments.

1 2 3 4 5

14. Credit cards can be used forpayments on different outlets.

1 2 3 4 5

15. Interest rates charged on creditcard balances comply with thebenefits it provides.

1 2 3 4 5

16. Credit card limits offered byissuers are sufficient. 1 2 3 4 5

17. Banks clearly provide theinformation about all types ofcosts being charged on creditcards.

1 2 3 4 5

18. I hardly pay my credit cardoutstanding balance in full.

1 2 3 4 5

19. My merchant accepts credit cardwhen I make large sizetransaction.

1 2 3 4 5

20. 4. There are sufficient numbersof outlets accepting credit

cards in Pakistan.1 2 3 4 5

21. My credit card has wideacceptance abroad.

1 2 3 4 5

22. I am satisfied with the time periodwithin which I have to clear mycredit card outstanding balance.

1 2 3 4 5

23. The number of paying centersavailable for clearing bill in myhometown is sufficient.

1 2 3 4 5

24. Current security features providedby card issuers are sufficient.

1 2 3 4 5



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How much importance do you put on each of the following factors as abarrier in your decision of adopting a credit card?

(1 = Not important at all, 2 = Not very important, 3 = Neutral, 4 = Some whatimportant, 5 = Very important)

a. High interest rates charged 1 2 3 4 5

b. Heavy additional charges 1 2 3 4 5

c. Insufficient credit limit 1 2 3 4 5

d. Complexity of information 1 2 3 4 5

e. Low International acceptability 1 2 3 4 5

f. Low Domestic acceptability 1 2 3 4 5

g. Long Application approval time 1 2 3 4 5

h. Short repayment period 1 2 3 4 5

i. Strict Legal requirements 1 2 3 4 5

j. Complexity of issuance procedure 1 2 3 4 5

k. High Security risk 1 2 3 4 5

l. Lack of information 1 2 3 4 5



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QUESTIONNAIRE FOR NON-CARDHOLDERS

Ageb) Below 25 b) 25-35 c) 35-45 d) 45 and above

Gendero Male

o Female

Marital Statuso Single

o Married

Religion -----------------------

Occupationb) Govt. employee b) Businessman c) Student d) Landlord e)Other -----------

Educationo Matriculation

o Intermediate

o Bachelors

o Masters

o Others ----------------------

Monthly Incomeo Below 20,000

o 20,000-30,000

o 30,000-40,000

o 40,000-80.000

o 80,000 and above

5. Your account type Personal Business

6. What do you know about credit card?

o I dont know what is a credit card



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o I know about credit card but not enough detail

o I have enough information about credit cards

o I have experience of having a credit card

7. To what extent, each of the following sources was helping, to let youknow about the credit cards.

Not at all To some extent Great extent

o Friends & Family 1 2

3

o News articles and Television programs 1 2

3

o Internet 1 2 3

o Bank staff 1 2 3

o Company/Bank advertisements 1 2

3

o Brochures/ Leaflets 1 2

3

Please express your degree of agreement with following statements.(1 = Strongly disagree, 2 = Disagree, 3 = Indifferent, 4 = Agree, 5 = Stronglyagree)

StronglyDisagree

Disagree Indifferent Agree StronglyAgree

4. Use of credit card may lead tooverspending.

1 2 3 4 5

5. Overspending is the fault ofconsumers, not the credit cardcompanies.

1 2 3 4 5

6. It is the banks right to chargeinterest on the loan they provide tocustomers.

1 2 3 4 5

7. Use of credit card is against Islamicvalues.

1 2 3 4 5

8. Credit card companies make it hardfor people to get out of debt.

1 2 3 4 5

9. Credit card is very likely to be lostor stolen.

1 2 3 4 5

10. I feel comfortable to adopt newtechnological products.

1 2 3 4 5

11. Consumers would be better off ifthere were no credit cards.

1 2 3 4 5



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12. Credit cards are very helpful foronline payments.

1 2 3 4 5

13. Credit cards can be used forpayments on different outlets.

1 2 3 4 5

14. Interest rates charged on credit

card balances comply with thebenefits it provides. 1 2 3 4 5

15. Credit card limits offered by issuersare sufficient.

1 2 3 4 5

16. Banks provide complete informationabout all types of costs charged oncredit cards.

1 2 3 4 5

17. There are sufficient numbers ofoutlets accepting credit cards inPakistan.

1 2 3 4 5

18. Application approval time is long,

that hinders me to adopt creditcard. 1 2 3 4 5

19. I am not using credit card becauseit has low acceptance abroad.

1 2 3 4 5

20. I dont use credit card because timeperiod for clearing outstandingbalance is very short.

1 2 3 4 5

How much importance do you put on each of the following factors as a barrier in

your decision of adopting a credit card?

(1 = Not important at all, 2 = Not very important, 3 = Neutral, 4 = Some what

important, 5 = Very important)

m. High interest rates charged 1 2 3 4 5

n. Heavy additional charges 1 2 3 4 5

o. Insufficient credit limit 1 2 3 4 5

p. Complexity of information 1 2 3 4 5

q. Low International acceptability 1 2 3 4 5

r. Low Domestic acceptability 1 2 3 4 5

s. Long Application approval time 1 2 3 4 5

t. Short repayment period 1 2 3 4 5

u. Strict Legal requirements 1 2 3 4 5



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v. Complexity of issuance procedure 1 2 3 4 5

w. High Security risk 1 2 3 4 5

x. Lack of information 1 2 3 4 5

Research Report Hasnain

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